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IMF BAILOUT AND FINANCIAL AND CORPORATE RESTRUCTURING IN THE REPUBLIC OF KOREA
Author(s) -
Dohyung KIM
Publication year - 1999
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.1999.tb00243.x
Subject(s) - bailout , restructuring , financial system , business , economics , finance , financial crisis , macroeconomics
HERE is a good deal of opinion at present, inside and outside of the Republic of Korea, that the country has been moving ahead with financial and corporate restructuring as prescribed by the International Monetary Fund and is extracting itself from the economic crisis that struck East Asia. Without doubt, Korea at the early stages of the currency crisis did accede to the IMF’s stringent macroeconomic stabilization policies and the Fund’s call for structural reform. The government introduced high interest rates and tight fiscal policies which paved the way for the opening of the financial market along with which other structural adjustments were put into effect. The result was that by the middle of 1998, interest rates could be brought down allowing the government to take stimulus measures through fiscal expansion which worked to offset the deflationary factors brought on by the structural adjustments. These steps led to the stabilization of the financial market and recovery of the real economy (Table I). However, Korea was given little choice about accepting the IMF’s prescribed regimen (what in Korea has been dubbed the IMF bailout), and when the process of coping with this regimen is examined closely, one sees that it has not been such a simple task. Even now Korea has yet to fully overcome the impact of the IMF bailout.